Question

Question: Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from...

Question: Assume Health-R-Us is a legal monopoly: it is a monopoly due to legal protection from the government in the form of a patent issued to the company. Imagine that the government withdraws the legal protection for Health-R-Us such that the market becomes competitive. Will a typical individual firm in this competitive market make economic profit in the long run? Why or why not? Use an appropriate firm-level diagram to illustrate and explain your answer.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Health-R-Us makes profit till the time it had legal protection form the government and it was in monopoly. It had freedom to keep high price as there was no competitor and customer had no choice. When Health-R-U enters into competitive market will not be able to enjoy monopoly as there will be more vendors to sell the product. If it wants to be in the market then it has to become competitive and charge price as per the demand and supply parameter. Keeping higher price than the equilibrium point will lead to loss and however keeping competitive price will lead to profit in the long run.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a firm called Health-R-Us that is a monopoly. How does Health-RUs decide the price to...
Consider a firm called Health-R-Us that is a monopoly. How does Health-RUs decide the price to charge and quantity to sell of the good it has a monopoly on? Illustrate your answer using a fully labelled and explained market diagram. Assume Health-R-Us is making monopoly profits and illustrate these on the same diagram. In addition, indicate the area on your diagram that illustrates the efficiency cost (the dead weight loss) of the monopoly, and explain why this dead weight loss...
1. Compared with a perfectively competitive market a monopoly is inefficient because                    a. it raises...
1. Compared with a perfectively competitive market a monopoly is inefficient because                    a. it raises the market price above marginal cost and produces a smaller output.             b. it produces a greater output but charges a lower price.             c. it produces the same quantity while charging a higher price.             d. all surplus goes to the producer.             e. it leads to a smaller producer surplus but greater consumer surplus. 2. The demand curve of a monopolist typically...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds...
Assume that consumers view tax preparation services as undifferentiated among producers, and that there are hundreds of companies offering tax preparation in a given market. The current market equilibrium price is $120. Jojo’s Tax Service has a daily, short-run total cost given by TC = 100 + 4Q2. Answer the following questions: How many tax returns should Jojo prepare each day if her goal is to maximize profits? How much will she earn in profit each day? A perfectly competitive...
Assume that the year is 2020, and you read the following brief article in the news:...
Assume that the year is 2020, and you read the following brief article in the news: September, 2020: Salmon fishermen in the Alaska fishery have been going through hard times for the past two years since the federal government approved the sale of genetically modified salmon. Grown in large tanks far from the ocean, these modified fish have genes that make them grow twice as fast as wild salmon, creating a fish product that can sell for much less than...
Question 1 2.5 pts 1. The perfectly competitive firm's demand curve is horizontal at the market...
Question 1 2.5 pts 1. The perfectly competitive firm's demand curve is horizontal at the market price. True False Flag this Question Question 2 2.5 pts 2. In perfect competition, the market price is established at the intersection of the market demand and market supply curves in the industry and the individual firms are "price takers" of that market price. True False Flag this Question Question 3 2.5 pts 3. The perfectly competitive firm will continue to produce in the...
Scenario Pigs R Us is a second generation, family-owned Richmond-based company with about 400 employees. It...
Scenario Pigs R Us is a second generation, family-owned Richmond-based company with about 400 employees. It slaughters, manufactures, and sells pork food products.  Pigs R Us (PRU) is a low-tech, hands-on, “bricks and mortar” type of company with solid brand recognition, an impeccable reputation for high quality and ethical standards. The processes used in manufacturing are with the highest ISO20002 standards, and the plant is maintained immaculately. The personnel are comprised of an older work force (average employee age is late...
In economics, the term “scarcity”meansthere .
In economics, the term “scarcity”meansthere                    .is a shortage of the factors ofproductionis equilibrium in themarketare unlimited wants and only limitedresourcesare limited wants and unlimitedresourcesA country has an absolute advantage in producing cars ifthat country                    .has a lower opportunity cost of producing cars than any othercountrycan produce more cars in a given amount of time than any othercountryhas a higher opportunity cost of producing cars than any othercountrycharges the highest price forcarsDuring bad economic times, many people lose their jobs. How would that...
What is Medicare Part C? Provides the aged with home health care Provides the aged with...
What is Medicare Part C? Provides the aged with home health care Provides the aged with prescription drugs Enables low-income aged to participate in Medicaid Provides a voluntary managed care option for the aged How is Medicaid financed? It is financed entirely by the federal government. It is financed entirely by the state. States receive the same percentage of federal support. States with lower per capita incomes receive a greater percentage of federal support If a healthcare system is "free"...
In February 2012, the Pepsi Next product was launched into the US market. This case study...
In February 2012, the Pepsi Next product was launched into the US market. This case study provides students with an interesting insight into PepsiCo’s new product process and some of the challenging decisions that they faced along the way. Pepsi Next Case Study Introduction Pepsi Next was launched by PepsiCo into the US market in February 2012, and has since been rolled out to various international markets (for instance, it was launched in Australia in September 2012). The new product...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT